If you've installed (or repaired) DotNet2 framework after installing IIS then you shouldn't need to add the default handler to anything, it should just inherit off the root (or so I've always assumed).

Thanks ar_anand,

This list added that last pieces that I needed to complete my install, especially the note on creating the database file in step 5. I also believe that granting full access to ASPNET eliminated a lot of file access problems, including the problem with DotNetNuke_template.mdf'. It would have been nice to have this information easier to find.

One more thing that should be on this list is, after the virtual directory has been created, and before you attempt to install in step 10, you need to use the IIS Manager to ensure the application is configured with .NET framework 2.0. By default on my XP Pro, 1.0 was selected.